96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
SB0174


 
Introduced 1/30/2009, by Sen. Don Harmon
 
SYNOPSIS AS INTRODUCED:
 		














805 ILCS 180/15-3









    Amends the Limited Liability Company Act. Provides that a member of a manager-managed company is held to specified standards of conduct to the extent that the member exercises the managerial authority vested in a manager under the Act (rather than applying such standards to a member who pursuant to the operating agreement exercises some or all of the authority of a manager in the management and conduct of the company's business). 
















LRB096 05838 KTG 15918 b

















 


 


A BILL FOR









 











SB0174

LRB096 05838 KTG 15918 b






1
    AN ACT concerning business.

 
2
    Be it enacted by the People of the State of Illinois,
 
3
represented in the General Assembly:


 
4
    Section 5. The Limited Liability Company Act is amended  by 
5
changing Section 15-3 as follows:
 



6
    (805 ILCS 180/15-3)



7
    Sec. 15-3. General standards of member and manager's 
8
conduct. 

9
    (a) The fiduciary duties a member owes to a member-managed 
10
company and its
other members include the duty of loyalty and 
11
the duty of care referred to in
subsections (b) and (c) of this 
12
Section.

13
    (b) A member's duty of loyalty to a member-managed company 
14
and its other
members includes the following:


15
        (1) to account to the company and to hold as trustee 
16
    for it any property,
profit, or benefit derived by the 
17
    member in the conduct or winding up of the
company's 
18
    business or derived from a use by the member of the 
19
    company's
property, including the appropriation of a 
20
    company's opportunity;


21
        (2) to act fairly when a member deals with the company 
22
    in the conduct or
winding up of the company's business as 
23
    or on behalf of a party having an
interest adverse to the 
 


 






SB0174
- 2 -
LRB096 05838 KTG 15918 b




1
    company; and


2
        (3) to refrain from competing with the company in the 
3
    conduct of the
company's business before the dissolution of 
4
    the company.

5
    (c) A member's duty of care to a member-managed company and 
6
its other
members in the conduct of and winding up of the 
7
company's business is limited to
refraining from engaging in 
8
grossly negligent or reckless conduct, intentional
misconduct, 
9
or a knowing violation of law.

10
    (d) A member shall discharge his or her duties to a 
11
member-managed company
and its other members under this Act or 
12
under the operating agreement and
exercise any rights 
13
consistent with the obligation of good faith and fair
dealing.

14
    (e) A member of a member-managed company does not violate a 
15
duty or
obligation under this Act or under the operating 
16
agreement merely because the
member's conduct furthers the 
17
member's own interest.

18
    (f) This Section applies to a person winding up the limited 
19
liability
company's business as the personal or legal 
20
representative of the last
surviving member as if the person 
21
were a member.

22
    (g) In a manager-managed company:


23
        (1) a member who is not also a manager owes no duties 
24
    to the company or to
the other members solely by reason of 
25
    being a member;


26
        (2) a manager is held to the same standards of conduct 
 


 






SB0174
- 3 -
LRB096 05838 KTG 15918 b




1
    prescribed for
members in subsections (b), (c), (d), and 
2
    (e) of this Section;


3
        (3) a member who pursuant to the operating agreement 
4
    exercises some or all
of the authority of a manager in the 
5
    management and conduct of the company's
business is held to 
6
    the standards of conduct in subsections (b),
(c), (d), and 
7
    (e) of this Section to the extent that the member exercises 
8
    the
managerial authority vested in a manager by this Act; 
9
    and


10
        (4) a manager is relieved of liability imposed by law 
11
    for violations of
the
standards prescribed by subsections

12
    (b), (c), (d), and (e) to the extent of the managerial 
13
    authority delegated to
the members by the operating 
14
    agreement.

15
(Source: P.A. 95-331, eff. 8-21-07.)